Dameeba Corp has a current D/V-ratio of 10% with expected cost of debt 2,1% p.a. The...

Dameeba Corp has a current D/V-ratio of 10% with expected cost of debt 2,1% p.a. The levered equity beta is 0,75. An increase to a target D/V-ratio of 90% is now planned increasing the expected cost of debt to 4,3% p.a. The corporate tax rate is 20%. The risk-free rate is 1% and the market risk premium 5% p.a. What will be Dameeba Corp’s new equity beta?

a. 0,885 b. 1,142 c. 1,030 d. 1,208

Expert Solution

ANSWER : C: 1.03

jeff jeffy answered 1 year ago

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